Quanex First-Quarter Net Sales Up 1.1 Percent from a Year Ago
March 6, 2012

Quanex Building Products Corp. of Houston, parent company of Edgetech IG of Cambridge, Ohio, released today its fiscal 2012 first-quarter results for the period ending January 31, 2012.

First-quarter 2012 consolidated net sales were $161.6 million, compared to $159.8 million a year ago, and included Edgetech net sales of $18.9 million, according to the company. First quarter 2012 operating loss was $0.18 per diluted share compared to an operating loss of $0.13 per diluted share a year ago.

The Engineered Products Group's (EPG) first-quarter 2012 net sales were $99.4 million, compared to $84.0 million a year ago, and included net sales of $18.9 million at Edgetech. First-quarter 2012 net sales, excluding Edgetech, were down about 4 percent from the year ago quarter, which benefited from higher demand as a result of a $1500 energy-efficient window tax credit program that expired on December 31, 2010, according to the company's report. EPG's first-quarter 2012 operating income was $1.8 million, compared to an operating loss of $0.7 million a year ago, and included an operating loss of $1.1 million at Edgetech. Segment expenses associated with the IG spacer consolidation program were $2.5 million in the quarter, $0.4 million of which were included in Edgetech's operating loss. First-quarter 2011 operating loss of $0.7 million included $5.2 million of consolidation and warranty reserve costs, according to the release.

At EPG, sales excluding Edgetech for the 12 months ended January 31, 2012, were down 2 percent from the previous 12 months, compared to U.S. window shipments as reported by Ducker Worldwide that were down 7 percent over the same periods. The integration of Edgetech into the EPG's sales and marketing organization was completed in September 2011, and, while still early, company officials believe the consolidated organization will continue to generate incremental opportunities.

Corporate expenses in the first quarter were $7.6 million and included ERP expenses of $0.7 million, according to the company.

At quarter end, Quanex had a cash balance of $81.7 million, a total debt outstanding balance of $1.6 million, and cash provided by operating activities from continuing operations of $2.1 million. The company had no borrowings under its $270 million revolving credit facility at quarter end, however, due to the facility's EBITDA covenant requirement, the available capacity was approximately $173 million at the end of the quarter. During the first quarter, the company purchased approximately $1.3 million of its outstanding common stock (94,337 shares of common stock at an average price of $13.61, including commissions).

Going forward, stagnant residential repair and replacement demand, historically low home starts, elevated residential foreclosures, and stringent credit conditions will create a difficult housing environment in 2012, according to the release. The company currently expects calendar year 2012 U.S. window shipments to be about 39 million units, which is 8 percent below Ducker's forecasted shipments of 42.6 million. For 2012, the company estimated capital expenditures of $49 million (includes IG consolidation capital of $7 million and ERP capital of $13 million), corporate expenses of $31 million (includes ERP costs of $3 million), and depreciation and amortization of $41 million (includes ERP depreciation of $3 million).

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